Pursuant to Ind.Appellate Rule 65(D),

this Memorandum Decision shall not be regarded as precedent or cited before any court except for the purpose of establishing the defense of res judicata, collateral estoppel, or the law of the case.

ATTORNEY FOR APPELLANT S : ATTORNEY S FOR APPELLEE S : GEORGE SISTEVARIS GREGORY F. ZOELLER Fort Wayne, Indiana Attorney General of Indiana KRISTIN GARN DAVID L. STEINER Deputy Attorney General Indianapolis, Indiana


## IN THE COURT OF APPEALS OF INDIANA

INDIANA AUTOMOBILE WHOLESALERS ) ASSOCIATION, INC., NATIONAL DEALER ) LICENSE, LLC and AUTO ACCEPTANCE ) GROUP, LLC, ) ) Appellant s - Plaintiffs , ) ) vs. ) ) No. 02A03

- 1404

- PL

- 119 CAROL MIHALIK, COMMISSIONER , ) SECURITIES DIVISION OF THE INDIANA ) SECRETARY OF STATE, ELIZABETH ) MURPHY, DIRECTOR, DEALER SERVICES ) DIVISI O N OF THE INDIANA SECRETARY OF ) STATE, CONNIE LAWSON, INDIANA SECRE

- ) TARY O F STATE, ) ) Appellee s - Defendants

. )2 APPEAL FROM THE ALLEN SUPERIOR COURT The Honorable Nancy Eshcoff Boyer , Judge Cause No. 02D01

- 1402

- PL

- 51 December 18, 2014 MEMORANDUM DECIS ION

– NOT FOR PUBLICATION BARNES, Judge Case Summary Indiana Automobile Wholesalers Association, Inc., (“IAWA”), National Dealer License, LLC, (“NDL”), and Auto Acc eptance Group, LLC, (“AAG”) (collectively, “ the Appellants”) appeal the dismissal of their complaint for declaratory judgment and injunctive relief against Carol Mihalik, Commissioner of the Securities Division of the
Indiana Secretary of State, Elizabeth Murphy, Director of the Dealer Services Division of the Indiana Secretary of State, and Connie Lawson, Secretary of State , (collectively, “Secretary of State”). We affirm.
Issue s The Appellants raise one issue, which we restate as : I. whether AAG exhaust ed its administrative remedies; and
II. whether IAWA and NDL have standing to pursue a declaratory judgment action

.

Facts IAWA is a trade association that represents more than 200 actively

- licensed automobile wholesale vehicle dealers in Indiana , and i t is authorized to sue on behalf of3

its members

. 1 NDL is in the business of leasing space to licensed wholesale dealers and, beginning in 2009, rented office space in Fort Wayne and provided administrative services to approximately 200 Indiana wholesale d ealer s . As a result of increased wholesale dealer license revocations by the Secretary of State , who oversees the licensure and administration of wholesale dealer licenses, a number of NDL’s tenants breached
their contracts with NDL , and NDL stopped opera ting its rental business

. AAG was a licensed wholesale dealer until September 5, 2013, when its license was revoked by the Secretary of State for its failure to maintain an established place of business and for failing to meet minimum sales requirements. AAG did not appeal the revocation of its license but would like to apply for a new license in the future

. On February 13 , 2014, the Appellants filed a complaint against the Secretary of State seeking a declaratory judgment and injunctive relief. The c omplaint raised several constitutional challenges to the administration of Senate Enrolled Act No. 537 (“the Act”) , which created a n article regulating dealer services and requiring the Secretary of State to administer and enforce the new legislation and t o adopt emergency rules and permanent rules to carry out her duties under the article. See Ind. Code §§ 9

- 32

- 3

- 2, 9

- 32

- 3

- 1. The amended complaint included the following legal claims: 2

62. Key provisions of [the Act], the relevant sections of the administ rative code, and the Emergency Order are not in accordance with law and are void.

1 “Wholesale dealer” is defined as “ a person who is enga ged in the business of buying or selling motor vehicles for resale to other dealers, wholesale dealers, transfer dealers, or persons other than the general public. ” Ind. Code § 9

- 32

- 2

- 28.

2 During the proceedings, the Appellants filed two amended comp laints.4 63. The Office of the Secretary of State, in enacting the Emergency Order, ostensibl y effective as of September 13, 2013, failed to follow the dictates of I.C. 9

- 32

- 3

- 1, and I.C. 4

- 22

- 37.1, in that it failed to give proper notice and solicitation of public comments prior to enactment of the law. The Emergency Rules were not properly promulgated and are void ab initio

. 64. The application and enforcement of [the Act], the relevant sections of the administrative code, and the Emergency Order, in relation to wholesale dealers, by the Secretary, the Commissioner and the Director are arbitrary, capricious and an abuse of discretion. 65. Key provision s of [the Act], the relev ant sections of the administrative code, and Emergency order, and the administration and enforcement of the laws and regulations by the Secretary, Commissioner and Director violate the constitutional rights of due process for wholesale dealers under the Fi fth Amendment to the United States Constitution. In particular, and not by way of limitation, the Secretary, Commissioner and Director immediately, and without the opportunity to be heard, deny applications pending an appeal, and shut down the operations of a going concern, causing financial loss, personal hardship and extreme burden on wholesale dealers.
66. Key provision s of [the Act], the relevant sections of the administrative code, and Emergency order, and the administration and enforcement of the laws and regulations by the Secretary, Commissioner and Director, violate the prohibition of ex post facto laws , which prohibitions are enumerated in Article I, Section 24, of the Indiana Constitution, and clause 3 of Article I, Section 9 of the United St ates Constitution. . . .
67. Key provision s of [the Act], the relevant sections of the administrative code, and Emergency order, and the administration and enforcement of the laws and regulations by the Secretary, Commissioner and Director , violate the co ntract clause of the Indiana Constitution, Art. 1, Sect. 14, which prohibits laws impairing contracts.5 68. Key provision s of [the Act], the relevant sections of the administrative code, and Emergency order, and the administration and enforcement of the la ws and regulations by the Secretary, Commissioner and Director , violate the equal protection clause of the U.S. Constitution, Amnd. XIV, Sect. 1, and the Indiana Constitution Art. 1, Sect. 23, which prohibit state governments from creating unreasonable, ar tificial, and arbitrary legislative classifications. Both the U.S. and Indiana Constitutions guarantee that all persons subjected to state legislation must be treated alike, under like circumstances and conditions, both in privileges conferred and in liab ilities imposed[.]
69. Key provision s of [the Act], the relevant sections of the administrative code, and Emergency order, and the administration and enforcement of the laws and regulations by the Secretary, Commissioner and Director , violate Indiana’s Eq ual Privileges Clause, and the laws and regulations in question fail to demonstrate a legitimate government interest in their enactment or enforcement.
70. Key provision s of [the Act], the relevant sections of the administrative code, and Emergency O rder are constitutionally void for vagueness under the Fifth and Fourteenth Amendments to the United States Constitution, because they do not give fair notice of what is punishable and they give arbitrary enforcement powers to the government. App. pp. 27

- 28. On February 26, 2013, the Secretary of State filed a motion to dismiss for lack of subject matter jurisdiction, arguing that the Appellants had failed to exhaust their administrative remedies and lacked standing. 3 Following a hearing, the Appellants file d a supplemental memorandum in opposition to the Secretary of State’s motion to dismiss.

3 In its motion to dismiss, the Secretary of State conceded that IAWA might have associational standing but that discovery would have to be conducted before determining such.6

On March 13, 2014, the trial court granted the Secretary of State’s motion to dismiss

. The trial court concluded:

[The Administrative Orders and Procedures Act (“AOP A”)] provides the vehicle for Plaintiffs to raise their constitutional questions. AOPA provides an available administrative procedure to address all of the Plaintiffs’ claims. The administrative procedures must be exhausted. Failure to exhaust administr ative remedies deprives this court of subject matter jurisdiction. Id. at 9. Following the dismissal, upon the Appellants’ motion, the trial court clarified that it had considered the second amended complaint in ruling on the motion to dismiss. The Appe llants now appeal. Analysis As an initial matter we must determine the appropriate standard of review. The parties framed the issue and the trial court addressed it as a motion to dismiss for lack of subject matter jurisdiction pursuant to Indiana Trial Rule 12(B)(1). However, our supreme court has recently clarified that the failure to exhaust administrative remedies is

not a question of subject matter jurisdiction but a question of procedural error. See First Am. Title Ins. Co. v. Robertson , No. 49S0 4

- 1311

- PL

- 732, 2014 , slip op. 3

- 4 (Ind. Nov. 13, 2014) (summarily affirming the “ portion of the Court of Appeals opinion holding that the exhaustion of administrative remedies under AOPA is a procedural error and does not implicate the trial court ’ s subjec t matter jurisdiction .”). Likewise, “ A claim of lack of standing is properly treated as a motion to dismiss under Indiana Trial Rule 12(B)(6) for failure to state a claim upon which relief can be granted. ” McPeek v. McCardle , 888 N.E.2d 171, 173 (Ind. 20 08 )

. Thus, the Secretary of State’s motion is more appropriate ly7

viewed as a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Trial Rule 12(B)(6). A Trial Rule 12(B)(6) m otion tests the legal sufficiency of a clai m, not the facts supporting it. Id. We review a trial court ’ s dismissal pursuant to Trial Rule 12(B)(6) de

novo . Id. We view the complaint in the light most fav orable to the non

- moving party and must determine whether the complaint states any facts on which the trial court could have granted relief. Id. at 173

- 74. “ If a complaint states a set of facts that, even if true, would not support the relief requested, we will affirm the dismissal. ” Id. at 174. We may affirm the grant ing of a motion to d ismiss if it is s ustainable on any theory. Id. We also note that the Appellants claim that the trial court erroneously dismissed their complaint and directed them to pursue administrative remedies. The Appellants contend, “Because there is no case or c ontroversy surrounding any speci fic action, violation or remedy relating to any of [the Appellants] before an administrative body, there is no administrative remedy available to them.” Appellants’ Br. p. 30. Because the Appellants are situated differentl y, we address the dismissal of each Appellant separately.

I
. Exhaustion of Administrative Remedies

“ It has long been Indiana law that a claimant with an available administrative remedy must pursue that remedy before being allowed access to the judicial po wer. ” Advantage Home Health Care, Inc. v. Indiana State Dep ’ t of Health , 829 N.E.2d 499, 503 (Ind. 2005)

. Chapter 5 of AOPA “ establishes the exclusive means for

judicial review of an agency action, ” and provides that a person aggrieved by agency action may seek judicial review8 “ only after exhausting all administrative remedies available within the agency whose action is being challenged and within any other agency authorized to exercise administrative review. ” Woodruff v. Indiana Family & Soc. Servs. Admin. , 964 N.E.2d 784, 790 (Ind. 2012) (quoting Ind. Code §§ 4

- 21.5

- 5

- 1,

- 4(a)), cert. denied

. Our supreme court has explained that by requiring the exhaustion of administrative remedies :

(1) premature litigation may be avoided; (2) an adequate record for judicial review may be compiled; and (3) agencies retain the opportunity and autonomy to correct their own errors. Even if the ground of the complaint is the unconstitutionality of the statute, which may be beyond the agency ’ s power to resolve, exhaustio n of administrative remedies may still be required because administrative action may resolve the case on other grounds without confronting broader legal issues. Indiana Dep ’ t of Envtl. Mgmt. v. Twin Eagle LLC , 798 N.E.2d 839, 844 (Ind. 2003)

. AAG , a forme rly licensed wholesale dealer, did not seek judicial review when its license was revoked and argues that it is not challenging that decision. Instead, AAG contends that it would like t o apply for a new license and is first seeking “to remove uncertainty a nd to clarify or remove laws which are specious and open to abuse.” Appellants’ Reply Br. p. 5. AAG , however, has not pursued available administrative remedies by actually applying for a license

. Its failure to apply for a license, for whatever

reason, does not permit it to do an end

- run around AOPA and pursue judicial remedies such as a declaratory judgment action. Because AAG did not challenge the September 2013 revocation or apply for new a license, we must conclude that A A G failed to exhaust its adm inistrative remedies.9

AAG contend s that it should not be required to exhaust administrative remedies because it would have been futile given the Secretary of State’s bias against wholesale dealers. Although exhaustion of remedies may be excused if the e xercise would be futile, the exhaustion requirement should not be dispensed with lightly on those grounds. Johnson v. Celebration Fireworks, Inc. , 829 N.E.2d 979, 984 (Ind. 2005)

. To prevail on a claim of futility, “ ‘ one must show that the administrative agency was powerless to effect a remedy or that it would have been impossible or fruitless and of no value under the circumstances. ’” Id. (quoting M

- Plan, Inc. v. Indiana Comprehensive Health Ins. Ass ’ n , 809 N.E.2d 834, 840 (Ind. 2004) ). AAG relies on Scheub v. Van Kalker Family Ltd. P ’ ship , 991 N.E.2d 952, 960 (Ind. Ct. App. 2013) , in which a panel of this court held that exhaustion of administrative remedies was excused where the record established that a board member interfered with

an applicant’s re zoning procedure by actively organizing against the rezoning petition and attempting to make the project so expensive that it would not be feasible. The Appellant s contend that the Secretary of State is similarly biased because applications are being deni ed at a rate of 70% , out

- of

- state parties are being targeted, and the Director of the Dealer Services Division appeared before an Indiana House of Representatives committee arguing in favor of the elimination of wholesale dealer licenses. Even taking the se assertions at face value, we are not convinced this purported bias excuses AAG from exhausting administrative remedies. First , there is no record of the kind of personal interference in the application process that was clearly established in Scheub . M oreover, o ur supreme court observed in Celebration that “the mere fact that an10

administrative agency might refuse to provide the relief request ed does not amount to futility.” Celebration , 829 N.E.2d at 984. The Celebration court reasoned that, even if
C elebration is unsuccessful in an administrative challenge, the Commission may produce a reasoned explanation of the underlying positions , which in itself would be of value
before resort ing to the c ourts to resolve such an issue. Id. Likewise, even if it is inevitable that the Secretary of State will ultimately deny AAG’s application, the exhaustion of administrative remedies allows for the creation of a record for judicial review. Thus, AAG has not established that the Secretary of the State’s purported bias renders exhaustion of administrative remedies futile. Further , we reject AAG’s claim that it should be excused from exhausting its administrative remedies because it raises constitutional challenges . It is well settled that ,

e ven if the ground of the complaint is the unconstitutionality of the statute, exhaustion of administrative remedies may still be required because administrative action may resolve the case on other grounds without confronting broader legal issues. Twin Eagle , 798 N.E.2d at 844 ; see also I.C. § 4

- 21.5

- 5

- 14 (d)(2) ( providing for judicial review of an agency action that is “ contrary to constitutional right, power, privilege, or immunity [.]” ). The heart of the complaint is whether the Secretary of State’s application and
enforcement of the statute s and the emergency rules violate various constitutional rights. In this regard, we are not faced with a pure question of law that might allow AAG to circumvent the administrative process. See, e.g. , Twin Eagle , 798 N.E.2d at 844 (agreeing with Twin Eagle that its challenge to IDEM ’ s authority does not require exhaustion of remedies because at least the first two issues turn on issues of law and11

remanding the remaining “fact sensitive issue” for administrative proceedings) ; Outboard Boating Club of Evansville, Inc. v. Indiana State Dep ’ t of Health , 952 N.E.2d 340, 346 (Ind. Ct. App. 2011) (“[A]lthough the Clubs challenge the ISDH ’ s regulation of their facilities as ultra vires and void, because resolution of the issue turns on factual
determi nations rather than statutory interpretation, the question must first be addressed through the administrative process. ”) , trans. denied

. Thus, because AAG was required to pursue available administrative relief and did not , the trial court properly dismiss ed its allegations against the Secretary of State. II. Standing 4 A . IAWA IAWA contends that it represents the interests of wholesale dealers and alleges injury and imminent injury to all wholesale dealers resulting from the unconstitutional laws and the actions of the Secretary of State. We have recently observed :

The doctrine of standing focuses on whether the complaining party is the proper person to invoke the Court ’ s power. The standing requirement restrains the judiciary to resolving only those c ontroversies in which the complaining party has a demonstrable injury. In order to establish standing, a plaintiff must show that he or she has sustained, or was in immediate

4 The Appellants collectively claim to have standing under the publi c standing doctrine, “ which applies in cases where public rather than private rights are at issue and in cases which involve the enforcement of a public rather than a private right . . . .” State ex rel. Cittadine v. Indiana Dep ’ t of Transp. , 790 N.E.2d 9 78, 983 (Ind. 2003) . They, however, fail to acknowledge that “ persons availing themselves of the public standing doctrine nevertheless remain subject to various limitations.” Id. For example, the doctrine does not prevent the requirement of exhaustion o f administrative remedies and, “ to the extent that persons claiming public standing may be seeking only declaratory relief, they must be persons ‘ whose rights, status, or other legal relations are affected by a statute, municipal ordinance, contract, or fr anchise [.]’” Id. at 984 (quoting I.C. § 34

- 14

- 1

- 2). Thus, the Appellants may not use the public standing doctrine to avoid the exhaustion of remedies requirement or seek declaratory relief for an injury they have not suffered.12 danger of sustaining, some direct injury as a result of the conduct at issue.
B arnette v. U.S. Architects, LLP , 15 N.E.3d 1, 11 (Ind. Ct. App. 2014) (citations omitted )

. Any injury to IAWA is derivative of that suffered by individual dealers who have sought licenses or could otherwise sue in their own right

. See id. at 12; see also Allen Cnty

. Bd. of Comm ’ rs v. Ne. Indiana Bldg. Trades Council , 954 N.E.2d 937, 941 (Ind. Ct. App. 2011) (acknowledging that an association has standing on behalf of its member s if it can establish “ 1) the association ’ s members would otherwise have standi ng to sue in their own right; 2) the interests the association seeks to protect are germane to its purpose; and 3) neither the claim asserted nor the relief requested requires participation of ind ividual members in the lawsuit.”) , trans. denied

. As we hav e discussed, those member

- dealers are required to exhaus t their administrative remedies and seek judicial review pursuant to AOPA , not circumvent the administrative process by filing a declaratory judgment action. Thus , the trial court properly dismissed IAWA’s allegations against the Secretary of State.
B . NDL NDL leases space to wholesale dealers and claims that i ts contracts have been impaired by the laws and the administration of the laws. In arguing that NDL does not have standing to seek judici al review under AOPA , the Secretary of State contends that NDL’s interest in not losing tenants is not a cognizable interest under AOPA. See I.C. §
4

- 21.5

- 5

- 3(a) (defining who has standing to obtain judicial review of an agency action). NDL claims that i t is entitled to pursue a declaratory judgment action because it does not13

hold or intend to hold a dealer’s license, is not subject to licensure by the Secretary of State, and is not required to exhaust administrative remedies. We agree that no administra tive remedy is available to NDL

. Nevertheless, we are not convinced that NDL has standing to pursue a declaratory judgment action.
To obtain declaratory relief, “ the person bringing the action must have a substantial present interest in the relief sough t. ” Midwest Psychological Ctr., Inc. v. Indiana Dep ’ t of Admin. , 959 N.E.2d 896, 903 (Ind. Ct. App. 2011) (quotation omitted) , trans. denied

. Jurisdiction under the Declaratory Judgment Act is based on a justiciable controversy or question that is clearl y defined and affects the legal right, the legal status, or the legal relationship of parties having adverse interests. Id. Although NDL might be indirectly affected by the wholesale dealers’ license revocations, NDL does not point to any action by the Secretary of State that directly impacts its right to contract with the dealers. To the extent NDL is affected by the Secretary of State’s regulation of wholesale dealers, its injuries are too remote to give it standing to sue the Secretary of State. ND L’s recourse for the dealers’ inability to perform their obligations pursuant to the terms of the ir contracts is a breach of contract claim , not a declaratory judgment action against the Secretary of State. Conclusion Because AAG did not exhaust its admin istrative remedies and IAWA and NDL do not have standing, t he trial court properly granted the Secreta ry of State’s motion to
dismiss. We affirm.14

Affirmed. BRADFORD, J., and BROWN, J., concur.